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Can You Put a House in a Trust to Avoid Care Home Fees? 2026 guidance

Putting property in a trust to avoid care home fees is something many people look into when thinking about how to pay for care home costs. But unless you choose the right kind of trust and meet certain criteria, this isn’t a guaranteed way to get around paying care home fees. In this guide, we explain the different types of trust, and how to put a house in a trust to avoid care home fees.

Key takeaways:

  • It is possible to put a property into a trust to avoid care home fees, but it isn’t a guaranteed solution. If your local authority deems that this was the primary purpose behind setting up the trust, they may declare this a ‘deprivation of assets’, and your property could still need to be used to pay towards your care home costs
  • Setting up a life interest trust as part of your estate planning can be a way to put your house into a trust to avoid care home fees in the future. This type of trust allows your partner to continue living in your property during their lifetime; it will then pass to other beneficiaries, such as your children, protecting your assets and their inheritance
  • Assets in a trust are not required to go through probate, and you’ll have greater control over how your assets are distributed in the future when you set up a trust. Depending on the type of trust, a reduced amount of inheritance tax may apply to your assets after your death
  • It’s important to seek professional legal advice when setting up a trust. Take the time to research the right type of trust for you, decide whether you’d like to appoint a relative, friend or third party as trustee, and make sure there’s detailed documentation outlining your wishes, as well as an official trust deed

Contents

  1. What is a property trust?
  2. Can putting your property into a trust avoid care home fees?
  3. What are the different types of trust?
  4. How does putting your home into a trust work?
  5. What are the advantages of putting a property into a trust?
  6. Are there any drawbacks to putting a property into a trust?
  7. FAQs
  • What is the seven-year rule?
  • Can you avoid paying care home fees without putting your home into a trust?
  • Do I need to consult a solicitor when putting a property into a trust

8. Dunham Care Homes: a home away from home

What is a property trust?

A property trust is a legal arrangement that can be set up to manage a person or couple’s property, which is often their most valuable asset. The original property owner is the ‘settlor’, who will appoint a person or company (‘the trustee’) to manage their assets for them. This means the trust then owns the property, not the settlor, so it is not counted as part of their assets.

At a specified time (often upon the death of the settlor), ownership of the property will pass to ‘the beneficiary’ or multiple beneficiaries. Using a property trust as part of your estate planning means you can have control over what happens to your assets in the future.

Trusts can be used to manage and protect assets other than property, including:

  • Land
  • Art
  • Antiques and collectibles
  • Investments, such as stocks and bonds
  • Intellectual property
  • Digital assets, such as online accounts

 

A trust helps to safeguard your most valuable assets for loved ones after you’re gone. Trusts to manage property are often created at the same time as Will, with life interest trusts a popular option that allow your partner to continue living in your home following your death, while also protecting it for your children’s future. 

People often look into the option of putting a house in a trust to avoid care home fees when planning for the future, but there are nuances to how this works, and it isn’t always a straightforward option.

While putting a property into a trust to avoid care home fees can be possible, this cannot be the primary purpose behind the establishment of the trust, otherwise your assets may not be protected. A life interest trust typically offers the best protection, but everyone’s situation is unique, so it’s important to seek legal advice on the most appropriate option for you.

If you’ve previously placed your property into a trust, then need to move into a care home, your local authority will need to assess how and why the trust was set up. They will look into whether the trust was primarily set up to avoid care home fees – this is known as ‘deprivation of assets’. If this is deemed to be the case, your property could still be counted as an asset and will need to be used towards your care home costs. However, if the local authority determines the trust was set up for another reason, such as estate planning, then your assets should remain protected.

What are the different types of trust?

There are several different types of trust that may be used in estate planning, and each has its own requirements, advantages and risks. The most common types of property trusts are:

  • Revocable living trust
  • Irrevocable trust
  • Life interest trust
  • Property protection trust / discretionary trust
  • Interest in possessions trust
  • Family trust

 

Trust type

How it works

1. Revocable living trust
  • Often used in estate planning to avoid probate
  • The settlor retains control over the trust
  • The settlor can modify or revoke the trust at any time during their lifetime
  • Any assets in the trust will still be considered part of the settlor’s estate. This means protection from creditors isn’t guaranteed, so assets could need to be used to pay for care home fees

2. Irrevocable trust
  • Removes property or other assets from the settlor’s estate
  • Provides greater protection for beneficiaries from creditors, inheritance tax, and potentially care home fees too
  • ‘Irrevocable’ means the settlor relinquishes all control, so the trust can’t be modified or revoked by the settlor

3. Life interest trust
  • Allows a named person (usually a spouse or partner) to live in the property concerned during their lifetime, after which it will pass to other beneficiaries
  • Often used to ensure inheritance is protected for children
  • Can protect a property from needing to be used to cover care home fees for the surviving partner

4. Property protection trust 
  • Used to protect assets for beneficiaries, for example if they are minors or have specific needs
  • Also known as discretionary trusts, as they give the trustee discretion over how and when to distribute assets to beneficiaries
  • Assets are not directly owned by beneficiaries
  • Can provide some protection from care home fees, depending on the specific structure of the trust

5. Interest in possessions trust
  • Often used in estate planning, allowing a named beneficiary to receive income generated from the trust’s assets throughout their lifetime
  • At the same time, it preserves the integrity of the trust’s capital for future beneficiaries
  • May provide greater protection against inheritance tax, depending on the trust’s structure

6. Family trust
  • Assets, such as property and capital, are held by a trustee for the benefit of family members
  • Provides greater control over how and when beneficiaries receive their inheritance
  • Assets within a family trust are not considered part of the settlor’s estate, potentially reducing inheritance tax liabilities and the need to use assets to pay for care home fees

How does putting your home into a trust work?

When setting up a trust to manage a property, the settlor will usually write a letter of wishes that outlines exactly what they’d like to happen to their home in the event of their death. The trustee is then required to ensure the trust’s assets are handled in line with the settlor’s wishes, while acting in the best interests of the named beneficiaries. 

You can still live in your property if it’s placed into a trust. If you need to move into a care home, the trustee will manage the sale of your property. 

Here are the steps to follow when putting your home into a trust:

  1. Select the right type of trust: do your research and choose the right type of trust for your needs. A life interest trust is often the preferred option, but you should consult with a solicitor or financial advisor to determine the best type of trust for you
  2. Appoint a trustee: assign a trustee to manage the assets held within the trust. This could be a trusted relative or friend, or a professional trustee, such as a lawyer. If you put your property into a revocable trust, you can serve as the trustee during your lifetime, but you must name a successor trustee
  3. Draft the trust deed: the trust deed will outline the terms of the trust, who the trustee is and what their responsibilities are, the intended beneficiaries, and any specific wishes regarding asset distribution. The trust deed should be drafted by a solicitor to ensure it complies with legal requirements
  4. Transfer ownership of the property: ownership of your home must be legally transferred from your name to the trust. A new deed will need to be created by your solicitor, stating that the trust is the property owner, and this will need registering with the Land Registry
  5. Pay required fees or taxes: there will usually be a cost associated with setting up the trust and transferring ownership of the property, and you may need to pay stamp duty or capital gains tax if the house is not your primary residence. Your solicitor will be able to advise you on all of the potential tax implications
  6. Ongoing trust management: the trustee will be responsible for making sure the property is transferred to the beneficiaries when required. They will also be tasked with managing the property and any necessary repairs while it remains in the trust

What are the advantages of putting a property into a trust?

Putting a property or other assets into a trust provides peace of mind that your assets will be distributed in line with your wishes. The advantages of putting a property into a trust include:

  • Avoid probate: assets in a trust are not required to go through probate. Probate is the legal process that manages the distribution of assets following an individual’s death. Not having to go through this process means assets can be distributed faster and more privately
  • Protect your assets: putting assets into a trust protects them from creditors, safeguarding your loved ones’ inheritance
  • Greater control: establishing a trust provides enhanced control over asset distribution, including how and when a property should be transferred, and how you’d like assets to be used; for example, for healthcare or investment purposes
  • Tax advantages: depending on the type of trust you place your property into, the amount of inheritance tax your beneficiaries are required to pay may be reduced

Are there any drawbacks to putting a property into a trust?

It’s important that you fully understand the implications of putting a house in a trust to avoid care home fees before doing so. Potential challenges associated with this may include:

  • Deprivation of assets: there is a risk that the authorities will consider the act of putting a property into a trust to avoid care home fees a deprivation of assets. If the local authority believes a house was placed there primarily to avoid paying fees, the trust may no longer be allowed to protect the property and will have to be used towards your care home costs
  • Restricted access to assets: when a home is placed into a trust, the original owner may have limited access to the asset, and might relinquish some control. As a result, this could complicate other decisions regarding assets and finances
  • Tax implications: putting a property into a trust may impact income tax, estate tax or capital gains tax, which is why it’s important to seek professional legal advice before setting up a trust
  • Set-up costs and ongoing admin: the cost of setting up a trust will vary and it can be a more expensive option than setting up a Will or putting a Power of Attorney in place. There can also be a lot of admin involved

FAQs

What is the seven-year rule?

The ‘seven-year rule’ is something you may come across when researching the options around putting a house in a trust to avoid care home fees. The rule states that gifts – for example, the signing over of a property – to an individual may not be subject to inheritance tax if the donor lives for seven years after the gift is made. If the donor dies before seven years pass, a lesser level of inheritance tax may apply. The purpose of the seven-year rule is to prevent people from making significant gifts to loved ones at the end of their life in order to avoid paying inheritance tax altogether. 

Can you avoid paying care home fees without putting your home into a trust?

The amount you will be required to pay towards your care will depend on the value of your assets and capital. In England, if this is valued above £23,250*, you’ll be required to self-fund your care home fees in full, until your capital falls below this level. If your total capital is below this amount, your local authority will carry out a financial assessment to determine whether they are able to contribute towards your care home costs.

Some adults with complex, long-term health conditions will be eligible for NHS Continuing Healthcare, which may be able to arrange for the local Integrated Care Board (ICB) to pay for your care home costs. 

*Value correct as of December 2025

Do I need to consult a solicitor when putting a property into a trust?

Yes, we recommend getting professional legal advice from a solicitor when you’re considering putting a house in a trust to avoid care home fees in the future. Working with a solicitor means you can be sure the trust has been set up correctly, is compliant, and all related documents have been drafted as required. A solicitor can also provide you with up-to-date advice on the potential tax implications of putting a property into a trust.

Dunham Care Homes: a home away from home

We know it can be difficult to think about moving out of a beloved property or signing over responsibility for assets. At Dunham Care Homes, we make the transition to living in a care home as smooth and welcoming as possible for all of our residents. Our luxury care homes provide the highest standard of residential care, respite care, nursing care and dementia care amid comfortable surroundings with state-of-the-art facilities. 

Book a tour to see how our care homes truly feel like a home away from home, or contact us to ask any questions.